How globalisation can help or hinder development

Globalisation is having a dramatic effect - for good or bad - on world economies and on people's lives.

Positive impacts:

  • Inward investment by Trans National Corporations (TNCs) helps countries by providing new jobs and skills for local people.
  • TNCs bring wealth and foreign currency to local economies when they buy local resources, products and services. The extra money created by this investment can be spent on education, health and infrastructure.
  • The sharing of ideas, experiences and lifestyles of people and cultures. People can experience foods and other products not previously available in their countries.
  • Globalisation increases awareness of events in faraway parts of the world. For example, the UK was quickly made aware of the 2004 tsunami and sent help rapidly in response.
  • Globalisation may help to make people more aware of global issues such as deforestation and global warming and alert them to the need for sustainable development.

Critics of globalisation include groups such as environmentalists, anti-poverty campaigners and trade unionists.

Negative impacts:

  • Globalisation operates mostly in the interests of the richest countries, which continue to dominate world trade at the expense of developing countries. The role of LEDCs in the world market is mostly to provide the North and West with cheap labour and raw materials.
  • There are no guarantees that the wealth from inward investment will benefit the local community. Often, profits are sent back to the MEDC where the TNC is based. Transnational companies, with their massive economies of scale, may drive local companies out of business. If it becomes cheaper to operate in another country, the TNC might close down the factory and make local people redundant.
  • An absence of strictly enforced international laws means that TNCs may operate in LEDCs in a way that would not be allowed in an MEDC. They may pollute the environment, run risks with safety or impose poor working conditions and low wages on local workers.
  • Globalisation is viewed by many as a threat to the world's cultural diversity. It is feared it might drown out local economies, traditions and languages and simply re-cast the whole world in the mould of the capitalist North and West. An example of this is that a Hollywood film is far more likely to be successful worldwide than one made in India or China, which also have thriving film industries.
  • Industry may begin to thrive in LEDCs at the expense of jobs in manufacturing in the UK and other MEDCs, especially in textiles.
Photograph of Employees of an assembly factory, making T-shirts in Honduras

Employees of an assembly factory, making T-shirts in Honduras

Anti-globalisation campaigners sometimes try to draw people's attention to these points by demonstrating against the World Trade Organisation. The World Trade Organisation is an inter-government organisation that promotes the free flow of trade around the world.